Monday, October 31, 2011
Saturday, October 29, 2011
The response to the crisis among those in the pro-market camp is much on the lines of the 1930s. On one side are those who blame what has gone wrong entirely on government. The Tea Party, in the US, has taken that position, with some success. In the UK, this strand is weaker. But there, too, some argue that the crisis is the result of Gordon Brown’s fiscal incontinence, over-regulated markets or incompetent central banks. In this, they follow the Austrian economists, Ludwig von Mises and Friedrich Hayek, in the 1930s. Against them are those who, following John Maynard Keynes, argue for a managed capitalism.Once again, much of this debate is over use of macroeconomic policy tools: should one tighten or loosen fiscal policy in a recession? Are unconventional monetary policies a path to hyperinflation or effective policies in extreme circumstances? Again, just as radical Keynesians emerged in the 1930s and afterwards, proponents of more intervention in markets are now emerging.This is a debate we need. In my view, both perspectives are useful. The Tea Party is wrong on the future of government. Even the US is not going back to the 19th-century state. But its more coherent members are right – and even agree with today’s protesters – that we have promoted an insider form of capitalism which exploits and indeed creates subsidies and tax loopholes on which the insiders prosper. The need to rescue banks was horrifying. The role of money in politics is disturbing. The danger is that we are moving from what the Nobel laureate economic historian, Douglass North, calls an “open-access order” to its opposite, a system in which political influence is decisive.This is not merely inefficient. It is unjust. Few begrudged Steve Jobs his fortune. The view on those who emerged rich from rescued businesses is very different. The era of bail-outs must end. Restructuring finance to make this credible is of huge importance for the future. Yet this is not all. Market capitalism creates inherent difficulties. The two most obvious are macroeconomic instability and extremes of inequality. The tendency of a market-oriented financial system to run away with itself has, again, been demonstrated on a large scale. On the free market right people argue that if only we went back to the gold standard or ended fractional reserve banking, all would be well. I question such claims. Instability is inherent in the game of betting on the future. Humans seem prone to self-fulfilling waves of optimism and pessimism. Ways of mitigating the extent and the consequences of such instability always need to be found.
CBO finds that between 1979 and 2007:
- For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent (see figure below).
- For others in the 20 percent of the population with the highest income, average real after-tax household income grew by 65 percent.
- For the 60 percent of the population in the middle of the income scale, the growth in average real after-tax household income was just under 40 percent.
- For the 20 percent of the population with the lowest income, the growth in average real after-tax household income was about 18 percent.
Tuesday, October 25, 2011
Tuesday, October 11, 2011
Georgia continues to have a higher unemployment rate than the national average, 10.1 percent, and it has the third highest poverty rate.Our members, like working people throughout the country, are saddled with debt. Their kids are graduating from college without job opportunities. They're also saddled with debt. We're seeing these same financial institutions and Wall Street interests bankroll attacks on unions and fundamental workers' rights.This is absolutely the right time for an economic justice movement behind the Teamsters' call to stop the war on workers.
Last night was quite a night. Watching one of the TV stories of it I was shocked at how different things are when you are actually on the ground in the midst of all the spectacle that comes when economic and social rot bubbles up to the surface.
Throughout history those seldom few are given to us.Those few who are willing to put their bodiesagainst the grinding machineof corruptand broken political systems, those fewthat say no to exploitationand extortion of the weakestby the strongest.They are giftsgiven to us, their actionsand wordsshould be given great weightin a world of shallow indulgences,petty thrills,and cowardly silence.A quiet tear, and a softly whispered "thank you" is all I can give back in return.
Sunday, October 9, 2011
And below is an open letter i've written to some of my former teachers and mentors as i've thought about what the #occupy movement is and means.
We need mentors... An Open Letter to my Teachers
to recover lost ground, to "popularize" political institutions and practices that have become severed from popular control. It involves renewing the meaning and substance of "representative democracy" by affirming the primacy of Congress, curbing the growth of presidential power, disentangling the stranglehold of lobbyists, democratizing the party system by eliminating the barriers to third parties, and enforcing an austere system of campaign finance.
I truly hope that those in the professional class recognize the moment for what it is, get involved sharing their knowledge and perspective, and feed positive energy to the well meaning participants--not to mention some good logical lashings to right-wing talking points being churned out as we speak in well financed think-tanks.
a U.S. recession is certainly possible, given that a Eurozone recession looks very likely. It is entirely conceivable that European policymakers will fail to gather the necessary resources in time to prevent financial-market contagion to peripheral countries, such as Italy and Spain, or to recapitalize their banks sufficiently quickly in the face of or, better yet, in advance of a Greek default. Such a financial shock, if it occurs, could be transmitted to the United States with sufficient severity to lead to recession here. This would be a new negative shock, however, and does not appear to be built into current early-warning financial indicators in the United States to a sufficient degree to make a U.S. recession the base case at this time. My current reading of the financial market indicators of the U.S. business cycle is that investors are more concerned about Japan-style economic stagnation right now than about a traditional recession.
Friday, October 7, 2011
Federal Reserve Bank of Atlanta President Dennis Lockhart said regulators haven’t yet put in place a system that would allow orderly failures of the largest financial firms without taxpayer rescues.“ The system we should work toward is one in which no institution is too big to fail,” Lockhart said today in a speech in Atlanta. “Much is being done in the aftermath of the Fed’s and the Treasury’s emergency interventions of 2008 to get to this state of affairs, but, in my view, this is a longer-term aspiration at this moment.”The Fed and other banking regulators are working to avoid more taxpayer-funded bailouts following the rescues of insurer American International Group Inc. and Citigroup Inc., which stoked public anger against the central bank and Congress. The Dodd-Frank Act passed last year mandated the Fed to monitor emerging risks to financial stability in the wake of the U.S. recession that ended two years ago.Lockhart said regulators must raise required levels of capital to protect against failure of the biggest banks.“Maintaining this buffer is especially important for the larger, systemically-important institutions for which government intervention in a crisis might otherwise be the only response to a threat to the entire system,” Lockhart said in the text of remarks at a panel discussion at Emory University’s Goizueta Business School. “We absolutely must get to a state in which private shareholders and creditors bear the risks of failure, not taxpayers.”
Thursday, October 6, 2011
Wednesday, October 5, 2011
"Looking around, we could use folding tables, white boards, coffee machine/microwave, and a printer(s), preferably wireless and/or big. Shelves or other ways to organize stuff."
The neoliberal era of Reagan/DLC Goldman Sachs Democrats is crashing and burning. Just needs a push...
You don’t have to dig deep to find evidence of that relationship. Former Democratic Senatorial Campaign Committee chairman Chuck Schumer (D-N.Y.) has long been “one of the biggest beneficiaries of Wall Street money that Congress [has] ever seen,” and, in turn, Schumer pushed hardto deregulate the financial industry before the 2008 crash and then bailout said financiers afterwards. When Congress debated financial reform last May, House Democratic Chief Deputy Whip Ron Kind (D-Wis.) told a gathering of financial lobbyists, “We’re working hard with you to get the policy right.” And, of course, President Obama chose Larry Summers and Tim Geithner as his chief economic advisers, despite their long records of Wall Street ties and favoritism. The surtax on millionaires that Senate Majority Leader Harry Reid announced on Wednesday replaces Obama’s proposals to tax not only a broader swath of wealthy individuals, but also oil and gas corporations.
Indeed, Democratic support for Wall Street was one of the major motivations behind Occupy Wall Street in the first place. When you read the heartbreaking “We are the 99 percent” Tumblr and you listen to the protesters, you don’t hear frustration with Republicans. The frustration is with Washington. And if Democrats want to work with the Occupy movement (or, indeed, make the “Republicans are the party of the rich” attack really work), they’ll have to undertake root-and-branch reform of their party’s relationship with Wall Street.
Tuesday, October 4, 2011
Justice George Carley will step down from the Georgia Supreme Court next July, giving Gov. Nathan Deal the chance to appoint Carley's successor.The justice taking Carley's place will have to run for re-election in 2014, the court said in a statement released Tuesday.“I am announcing this now to notify potential candidates before the election cycle gets into full swing,” said Carley, who had already announced that he did not plan to run for re-election.When he steps down, Carley, 73, will leave the high court as its chief justice. The court voted unanimously last month to have him serve as chief for two months before he leaves the court.
After an August rebound, Georgia’s manufacturing sector fell to its lowest level in nearly two years in September, according to the Econometric Center at Kennesaw State University’s Coles College of Business.Georgia’s Purchasing Managers Index (PMI) -- a reading of economic activity in the state’s manufacturing sector -- for September was 49.7, down 9.4 points from August.A PMI reading above 50 shows manufacturing activity is expanding, while a reading below 50 shows it is contracting.September was the third month in a four-month period that the PMI dropped, dashing expectation that August’s turnaround was sustainable, KSU said.“September’s losses more than offset the 7.4 points gained in August,” said Don Sabbarese, professor of economics and director of the Econometric Center at the Coles College of Business. “The latest reading suggests the perceived soft spot in June and July may be more pervasive than we first thought. Manufacturing has been one of the few bright spots in the current recovery, but apparently it’s not immune from the current slowdown in the broader economy.”Other highlights of the September PMI:
Production plunged 16.3 points to 46.7New orders dropped 6.9 to 45Employment fell 5.6 to 50
Goldman Sachs Group Inc. cut its global growth forecast for this year and next, predicting recessions in Germany and France as the European economy stalls and the risk of a contraction in the U.S. grows.The world economy will probably expand 3.8 percent this year and 3.5 percent in 2012, compared with earlier predictions of 3.9 percent for 2011 and 4.2 percent for next year, Goldman Sachs economists Jan Hatzius and Dominic Wilson wrote in an Oct. 3 report. The company lowered its forecast for earnings growth in Asia excluding Japan in a separate report today.Europe’s worsening sovereign debt woes and the threat of a U.S. recession have roiled global stock markets, erasing about $13 trillion from equities since May. The debt crisis has infected the European banking system, making financial institutions wary of lending to each other and pushing overnight deposits with the European Central Bank last week to the highest in more than a year.“The further deterioration in the economic and financial situation in the Euro area has led us to downgrade our global GDP forecast significantly,” the economists said. “Over the next few quarters, we now expect a mild recession in Germany and France, and a deeper downturn in the Euro periphery.”Euro RegionGoldman Sachs predicts the Euro region will expand 0.1 percent in 2012, down from an earlier forecast of 1.3 percent. It expects growth of 1.6 percent for this year.The ECB has been forced to purchase sovereign bonds to prevent the crisis from spreading to larger euro nations, and is providing banks with unlimited liquidity for up to six months against eligible collateral as governments struggle to restore investor confidence in the 17-member region.The Frankfurt-based central bank is likely to ease its liquidity policies further this month as a result of an increase in financial risk, Hatzius and Wilson said. The ECB will also probably cut its benchmark interest rate by 50 basis points to 1 percent by December, they said.“The increase in spillovers from the Euro area, primarily via tighter financial conditions, is the primary reason why we have also downgraded our forecasts for the U.S. further,” the economists said. “We now see the risk of a renewed U.S. recession at around 40 percent.”Flagging U.S.The U.S. economy will expand 1.7 percent this year and 1.4 percent in 2012, Goldman Sachs predicts. It had earlier estimated a 2 percent growth rate for the world’s largest economy next year.The Federal Reserve announced last month that it would replace $400 billion of short-term debt in its portfolio with longer-term Treasuries, a so-called Operation Twist, in an effort to further reduce borrowing costs and strengthen the flagging U.S. economy.“We expect additional easing of monetary policy beyond the ‘Operation Twist’ announced recently, although this may not come until sometime in the first half of 2012,” Hatzius and Wilson said. “In addition, the market’s focus on changes in the Fed’s guidance on future policies -- including a greater emphasis on the employment part of the ‘dual mandate’ and/or a temporarily higher inflation target -- is likely to intensify.”
Monday, October 3, 2011
Anybody have any clue what this means/has to do with anything?"I just don't see how it goes anywhere," said Sal Russo, strategist with the Tea Party Express, suggesting the demonstrations have too much of a "Marxist" appeal., "Most Americans understand that to have an employee, you have to have an employer," Russo said.
We have banking systems in the US and the Eurozone that are too large relative to the real economy and are increasingly extractive in their behavior. Until we have a significant change in the role and posture of the major capital markets players, we are unlikely to see a solid recovery.
As history teaches us, there are no rogue traders; there are only rogue banks.Here’s a news flash: If you issue credit, your working assumption must be that there are unqualified people who will try to borrow money from you. It is the job of every lending facility each and every day to separate the qualified borrower who has the capacity to service that debt from the unqualified borrowers who do not. This is why there is no such thing as a predatory borrower — banks must assume that all borrowers are predatory and protect themselves. This is why lenders — at least before 2002 – inquire about income, employment history, credit scores, other debt, etc., before making a mortgage loan.Similarly, if your business involves the use of leveraged capital for speculation by your employees, then it is your job to know which, if any, of your people are not competent. It’s a simple mathematical fact that some of your traders will take losses; in some cases, enormous but manageable losses. Your job is to identify these people and move them to other professions.There will be a small number who will try to hide their inabilities. Your job is to separate the qualified from the unqualified, to watch over the full lot of traders and speculators in your employ. Toward that end, you will establish trading limitations, leverage constraints, risk parameters. Traders must stay within the limitations you impose on them: money lines, maximum drawdowns, loss limits.Thus firms that highly leverage their capital to put it into the hands of a few thousand employee speculators have a crucial job: They must ensure that capital is being precisely and properly managed. They must make sure that risk levels are tolerable, that proper controls are in place, that their IT systems and internal technology can track what is happening, in as near to real time as possible.This is not easy. It is a complex set of processes that requires constant vigilance. It must be reflected in the corporate culture from the top down. And it becomes more and more complex as the size of the organization grows. The assumption must be that every employee is a potential rogue trader.Banks are supposed to have expertise in preserving capital and managing risk. If they cannot discharge those simple duties, then perhaps they should not be in the business of finance. Most of all, they should not be engaging in behavior that puts taxpayer money at risk.
I don’t share the antimarket sentiments of many of the protesters. Banks are invaluable institutions that, when functioning properly, move capital to its best use and raise living standards. But it’s also true that soaring leverage not only nurtured soaring bank profits in good years, but also soaring risks for the public in bad years.In effect, the banks socialized risk and privatized profits. Securitizing mortgages, for example, made many bankers wealthy while ultimately leaving governments indebted and citizens homeless.We’ve seen that inadequately regulated, too-big-to-fail banks can undermine the public interest rather than serve it — and in the last few years, banks got away with murder. It’s infuriating to see bankers who were rescued by taxpayers now moan about regulations intended to prevent the next bail-out. And it’s important that protesters spotlight rising inequality: does it feel right to anyone that the top 1 percent of Americans now possess a greater collective net worth than the entire bottom 90 percent?So for those who want to channel their amorphous frustration into practical demands, here are several specific suggestions:¶Impose a financial transactions tax. This would be a modest tax on financial trades, modeled on the suggestions of James Tobin, an American economist who won a Nobel Prize. The aim is in part to dampen speculative trading that creates dangerous volatility. Europe is moving toward a financial transactions tax, but the Obama administration is resisting — a reflection of its deference to Wall Street.¶Close the “carried interest” and “founders’ stock” loopholes, which may be the most unconscionable tax breaks in America. They allow our wealthiest citizens to pay very low tax rates by pretending that their labor compensation is a capital gain.¶Protect big banks from themselves. This means moving ahead with Basel III capital requirements and adopting the Volcker Rule to limit banks’ ability to engage in risky and speculative investments. Another sensible proposal, embraced by President Obama and a number of international experts, is the bank tax. This could be based on an institution’s size and leverage, so that bankers could pay for their cleanups — the finance equivalent of a pollution tax.Much of the sloganeering at “Occupy Wall Street” is pretty silly — but so is the self-righteous sloganeering of Wall Street itself. And if a ragtag band of youthful protesters can help bring a dose of accountability and equity to our financial system, more power to them.
Sunday, October 2, 2011
Detention Officer Terroyanne Harris considers the inmates she oversees on 3 North as much patient as prisoner. They suffer from schizophrenia, bipolar disorder, post-traumatic stress and other mental illnesses. Some walk aimlessly around their cell block. Some are lost in hallucinations.Most are in the Fulton County jail because they are more of a nuisance than a danger in the free world.Taken into custody for petty crimes such as trespassing, damaging property or resisting an officer, some end up trapped in a revolving door of arrest and release. Others languish behind bars for years as they wait to be declared competent enough to stand trial.Fulton County is not an aberration. The same is true in DeKalb, Cobb and Gwinnett counties, as well as some rural counties in the state.Jails have become the new asylums. In Georgia, more mentally ill people are locked away than are treated in all the state psychiatric hospitals combined.And it’s costing county taxpayers millions.
A new report says federal subsidies pay farmers to grow crops used in junk food that’s linked to high child obesity rates. The U.S. spent $6 billion on these subsidies last year.Jessica Wilson is with the Georgia Public Interest Research Group. She says through the report, the organization is urging Congress to cut corn syrup, corn starch and soy oil subsidies when it reauthorizes the farm bill next year.“The fact that we’re spending this much money subsidizing junk food demonstrates the need to reform our subsidies program and cut the wasteful spending,” she said.Georgia received $142 million in farm subsidies last year, according to the Environmental Working Group. Only a small part goes to crops that produce items targeted in the report. The state’s cotton and peanut industries received the lion’s share of the subsidies.Farmers say they need some of the other subsidies because they cover crop loss, damage from natural disasters and other emergencies.
Nobel prize economist Peter Diamond interview with WSJ’s Kelly Evans about his support of “Operation Twist,” his withdrawl from nomination to the Fed Board, and why more fiscal stimulus is need to fix the U.S. jobs problem.
There is an organizational meeting today at Hurt Park in Atlanta.
General Assembly Atlanta - Sunday 10/2 @ Hurt Park 5pm.
Use #OccupyAtlanta hashtag to spread the word, and #GeneralAssemblyATL as back channel for thought and discussion before, during, and after assembly.
Saturday, October 1, 2011
1. Cancel the debts. The crisis we face is fundamentally about a giant pool of bad mortgage debt. We need to work through these debts for recovery to really take off. The only question is who will absorb them—the creditors who made the loans or the people on the other side. In this case, there is no way to share these losses, and the government has stood behind the owners of many of these debts as being "Too Big to Fail."Anthropologist David Graeber cites historian Moses Finley, who identified “the perennial revolutionary programme of antiquity, cancel debts and redistribute the land.” This remains the case. The modern inventions for dealing with failed debts, bankruptcy and inflation, both have failed. The bankruptcy code has a flaw preventing mortgage workouts and inflation is so low that markets are worried that the level of debts could increase with time.The recession is far worse in areas of the country with the most bad debts and foreclosures, and debt relief can take the edge off. By making banks write down bad loans and work out failed mortgages we’ll have an system where the fraud that originated on Wall Street isn't borne entirely on the real economy.2. Investigate Wall Street. In the buildup to the crisis, bad loans that could never be paid back were passed out to unsuspecting homeowners. These loans were then passed along a chain until they got to investors who thought the loans were made with the utmost diligence. When the entire house of cards collapsed, homeowners were left with bad loans, investors looked to cover their investments, and a mind-boggling 5 million people were foreclosed on. Loans were made so fast that proper records weren’t kept, which means it’s difficult to hold creditors and debtors accountable.Now that the housing sector has collapsed, banks are cutting corners and using fake documentation to foreclose on properties that they don't have proper access to. In this mess of a system, homeowners who haven't missed a payment are being dragged down, through faulty paperwork. Several state attorneys general, including ones from New York and Nevada, have taken the lead in demanding an investigation, much to the chagrin of the Obama administration and financial elites. By supporting them, we’ll help build a country where there isn’t a two-tier system of justice.3. Create a Financial Transaction Tax. It is hard to think of something with such a boring name as a particularly radical solution, but an FTT would be an important first step toward remaking our economy so it is not so dependent on the financial sector.Thanks to a wave of deregulation laws in the late 1970s and early 1980s, finance has been one of the fastest-growing sectors over the past 30 years. It’s become so important, in fact, that some argue the economy should be run in accordance with the ideas and goals of the financial sector. This way of viewing our economy is less about long-term value than short-term price manipulation, less about investing in communities and peoples than about gaming tax codes and regulation and less about markets as a means of expression and more about consolidated, cornered market power. A financial transaction tax would help fight back against this and begin to steer our economy toward more sustainable and workable ends.There are endless problems that plague America, but if the battle is brought to Wall Street, the demands should address the financial sector directly. Creating a post-recession economy that is more egalitarian is going to be a battle for generations. But there are straightforward steps that can put us well on our way.